Report shows 'waste, abuse' of money in Allentown School District's business office

A forensic report of the Allentown School District's beleaguered business office found there was no written policy on using petty cash, that money from student activity funds was once used to buy beer at a golf fundraiser, and that $20,000 went missing from an account used to help homeless students.

The report, done by Bedics Tax and Forensic Accounting Service of Allentown, did not find any illegal activities from district employees, but noted that there were "several problem areas" that led to "waste, abuse and inappropriate spending of district funds." The report took issue with former Chief Financial Officer Jack Clark being in charge of the office at the time.

The report, which was completed in July, focused on the 2015-16 school year. The Morning Call had filed a Right-to-Know request for the report, but the district denied the request. The request was also denied at the state level on appeal.

But The Morning Call was recently able to view the report. Interim Superintendent Gary R. Cooper confirmed the authenticity of the report, which was never discussed publicly by the school board or district. He characterized the findings as saying there was some "sloppiness" that occurred in the business office, but it has since been corrected.

"There is a much closer scrutiny into the business office than there has been in the past," Cooper said.

Donations of pet oxygen masks helped save the lives of the dozens of cats caught in a house fire in South Allentown on Saturday, October 14.

Donations of pet oxygen masks helped save the lives of the dozens of cats caught in a house fire in South Allentown on Saturday, October 14.

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ASD Superintendent Thomas Parker discusses mentoring program.

ASD Superintendent Thomas Parker discusses mentoring program.

The report said Clark did not possess the educational or experience requirements to lead a business office. Before running the business office, Clark was the director of grants and development for the district.

Some board members had also questioned Clark's experience after an additional $11 million was discovered in the fund balance in 2015.

The Allentown and Bethlehem Area school districts are among the top 20 districts in the state paying hundreds of thousands of dollars to an online charter school that was slammed by the state auditor general for poor governance and conflicts of interest.

When asked if the audit led to Clark being transferred, Cooper said he couldn't comment on personnel issues, but said one negative report wouldn't cause an employee to be moved from his or her position.

Board President David Zimmerman declined to comment. Director Elizabeth Martinez and board Vice President Ce-Ce Gerlach, both of whom have been critical of the business office in the past, did not return messages.

Director Charlie Thiel said the report showed there were issues with the business office.

"This report clearly indicated what needs to be done to restore confidence in the Allentown School District's ability to store and manage public tax dollars," he said.

Bedics wrote in the report that the business office issued no written policy regarding petty cash, although there was an informal policy that some departments seemed to know about. The informal petty cash policy said each department should get $300 in petty cash, with a $50 limit on any one purchase. But because there was no written policy, there was confusion, the report said.

Staff at Allen High, for example, thought the petty cash fund totaled $500. The report said Allen did not receive any guidance or written policy regarding petty cash.

Some departments racked up almost $2,000 in petty cash spending. Petty cash was often used for getting staff and students food. The facilities department used petty cash to buy a $120 Keurig coffee machine from Bed, Bath & Beyond.

The report said Russell "Rooster" Valentini, the homeless educational liaison for the district, said he had a balance of $20,000 in his account, but the $20,000 was removed without explanation. Valentini tried to get an explanation but did not receive responses, according to the report.

Valentini did not respond to a message left Wednesday. Director Robert E. Smith Jr. said he understood that the missing $20,000 was just an accounting issue, and the money was returned to Valentini's account.

"There were some questions," Smith said. "But it was just an accounting mistake. It was a mix-up in the funds. He didn't lose a dime."

In May 2016, Dieruff High School held a golf outing fundraiser at Southmoore Golf Course in Moore Township. A half-keg of Coors Light beer was purchased for $125, according to the report. That money apparently came from the student activity fund, which is used typically for teams and clubs. Dieruff administrators signed off on that transaction, according to the report.

"It is disconcerting that beer would be provided at a student activity fundraiser, whether or not students were present; not to mention the potential liability issue for the Allentown School District," the report stated.

Smith said that was "a big mistake" from Dieruff, but that it was dealt with and money was reimbursed into the student activity fund.

Gretton said that when that incident happened, schools controlled transactions from the student activity fund. Now most transactions dealing with student activity funds are done through the business office, and any small purchases for student activity are monitored, he said.

It also noted that former Superintendent Russ Mayo was reimbursed for meals at local restaurants such as Copperhead Grill, Roar Social House and Billy's Downtown Diner with board members and local officials. Some of the meals slightly exceeded the amount the district allowed for meals, which is $20 for dinners, $13 for lunch and $7 for breakfast.

Mayo was also reimbursed for tax and tip, even though the report says he should not have been. According to the report, Clark instructed employees in the business office to reimburse Mayo for tax and tip.

Mayo's contract said he could be reimbursed for "reasonable and necessary expenses" that related to his duties.